Oil reaches record price

Oil prices spiked to a new high of $126.98 yesterday as news filtered through of an Iranian review of its current production levels.

The country is the world's fourth largest producer, delivering around 5% of global supply and fears that this output will be curtailed in the future arrested the slide precipitated by profit-taking seen earlier in the session.

Whilst the Iranian oil minister was quick to refute suggestions of imminent cutbacks, the fragility of the market in respect of threats to supply - coming on foot of Middle East tensions and disruptions in Nigeria - has resulted in an environment where the mere hint of geopolitical difficulties will inevitably result in a bullish surge.

The distillate market also added to upward momentum as heating oil futures traded at record highs.

This move reflects global tightness in distillates with outtages and refinery shutdowns having contributed to the fall in availability of products such as diesel.